On This Day In Finance: June 17 - The Hawley-Smoot Tariff Act of 1930

On June 17, 1930, U.S. President Herbert Hoover signs into law the Smoot-Hawley Tariff Act. The Act was enacted to protect domestic industry. However its inception led to world-wide retaliation and the worsening of the Great Depression.

Following the stock market crash of 1929 and the onset of the Great Depression, Congress debated the merits of The Act. The Smoot-Hawley Tariff Act outlined the immediate raising of U.S. tariffs on over 20,000 imported goods. Believing that raising tariffs on imported goods would aid the American economy and its workers, The Act was signed into law.

From its introduction, The Act faced many opponents. Even President Hoover himself did not fully support its intentions. Many petitions were signed and protests held in opposition to The Act - its retractors even cited that an increase on tariffs would do more harm to the American and global economies than good. This led to many of America's largest trading partners to impose similar sanctions on U.S. exports.

Initially, The Act appeared to be a success. Construction, payrolls and industrial production all increased in the months following its passing. However, by 1934 it was clear that its implications were not what law makers had hoped. U.S. imports and exports both fell sharply, and overall global trade decreased by an estimated 65%.

Today, it is widely agreed upon that the signing of the Hawley-Smoot Tariff Act into law was in fact a mistake. It led to greater global trade restrictions and added to the impacts of the Great Depression. (To learn more, read What Caused The Great Depression?.)